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Corporate tax cuts could juice up the rally by 10%, says this $405 billion portfolio manager

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Eaton Vance portfolio manager on tax reform and the market

It could morph into a vital part of the rally — one that affects the investments at money management firms across America.

Eaton Vance portfolio manager Michael Allison says tax reform could help drive stocks up by 5 percent to 10 percent more.

"There is some sense of positive movement on tax reform — certainly on the corporate side," Allison said Wednesday on CNBC's "Trading Nation. " "[What] we're spending a lot of time on is really thinking about the changes under the hood."

A corporate tax cut could beef up earnings among companies that currently face a relatively high rate, he said.

It's just one market-moving factor Eaton Vance is watching. The firm manages $405 billion in assets.

Yet there appears to be growing doubt tax reform will be passed — at least at the Federal Reserve.

San Francisco Fed President John Williams acknowledged on Wednesday that he's getting a "little bit discouraged" about whether Capitol Hill can approve one in the next six months or so.

Despite the climbing uncertainty, stocks have been on a tear during the past four weeks.

Stocks locked in another milestone on Wednesday. The Dow and soared to new intraday records, while the Nasdaq closed at an all-time high.

It's that momentum that's keeping Allison "cautiously optimistic" going into next year. A failure by Washington to approve a tax reform package wouldn't kill the stock market rally, but gains would be more muted, he said.

"There are other factors powering the market, as well, in terms of just a sense of accelerating global growth [and] economic growth," he said.

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The full interview with Eaton Vance portfolio manager Mike Allison